A cost containment program targeting home infusion drug therapy.

In 1980, only eight diagnoses could be treated in the home. In 1983, that number had risen to 30. By 1991, the number had increased to more than 900. It is estimated that more than 30 percent of what is being done in the hospital today will take place in the outpatient setting during this decade. Specifically, the home infusion market grew from $875 million in 1987 to more than $2.53 billion in 1991, and it is estimated to have been more than $4 billion in 1993. This single component of the home care industry is expected to continue to grow at an annual rate of nearly 30 percent.(*)

Home drug infusion technologies (HDITs) are becoming an integral part of medical care. HDIT is indicated for the stable patient who requires slow, repeated infusions of drugs or nutrients; therefore, its use is applicable in patients encountered in nearly every discipline. When used appropriately, it is safe and effective for a wide range of patients and disease states. In addition to proper patient selection, HDIT use requires a multidisciplinary effort among the clinical pharmacist, the skilled nurse or other trained care giver, and the patient's physician.

The number of companies providing HDIT has grown exponentially over the past decade. This is likely due, at least in part, to increases in price controls on other health care services by payers; doser scrutiny of inpatient care quality by the Joint Commission on Accreditation of Healthcare Organizations; lack of federal and state regulations; lack of formal references for usual and customary pricing; and lack of familiarity with new health care delivery settings, technology, and protocols among insurance claims reviewers and case managers.

The fees that home care companies charge for their goods and services are unregulated and generally not subject, as hospital-based treatment is, to diagnosis-related group (DRG) or precertification requirements. Moreover, types of therapy, components of therapy, and standards for therapy are numerous, varied, and constantly changing. As a result, no pricing standards exist, and payers find themselves paying widely varying prices for similar services within and across local, state, and regional boundaries.

Because of these factors, a computerized database for pricing has not been and may never be developed. Further, because of rapidly changing technology, the ever-increasing number of conditions that are being treated at home, and the subjective nature of decisions as to which adjunct components of therapy (pumps, filters, lines, catheters, nursing visits, blood draws, etc.) to use with the drug, it would be difficult, if not impossible, to maintain any degree of accuracy. However, by having a multidisciplinary team comprising experienced clinicians, reimbursement experts, and claims analysts who actively work in the field evaluate each scenario on a case-by-case basis, reliable and meaningfull estimates of reasonable pricing can be derived.

Study Design

In 1989, a physician, a doctor of pharmacy, and a senior executive from a small group insurer met to discuss possible ways to deal with the mounting costs associated with the care of insureds who were HIV positive. As a service to the insurance company and its case managers, a consulting service on home care pricing was begun. Because there was no database to consult regarding reasonable and customary prices, a target pretax margin of 20 percent was used as the standard.

In cases where therapy had already been administered or initiated, the actual HCFA 1500 and UB 282 forms submitted for payment by the home care providers were evaluated by one or more members of a multidisciplinary team consisting of a doctor of pharmacy, a clinical pharmacist, a home care nurse, a metabolic nutrition specialist, a claims analyst, a reimbursement specialist, and a physician. Insurance company claims analysts and case managers faxed the HCFA 1500 and UB 282 forms to the team, along with pertinent clinical information regarding patients. Formal written case consultations, which included recommended pricing structure, were faxed back to the case manager. The process was led and coordinated by the doctor of pharmacy, who worked directly with the case manager if further discussion was needed. The case manager would then call the provider and suggest alternate pricing for the services.

This protocol evolved to require preauthorization for home care services to the client population. Part of the preauthorization process was for the case manager to fax a "services description and quote sheet' to providers prior to authorization. Once the sheet was completed, signed, and forwarded to the case manager, he or she faxed it to the team for evaluation. The completed consult was faxed back to the case manager, who would then discuss the case with the provider to establish the price for services, a more appropriate level of service, or alternate methods for achieving the same therapeutic goal. These discussions took place prior to authorization of the therapy. The methodology was established with the goal of longitudinally tracking specific case data sets over time. All consults were identified by patient initials and the case manager name and were numbered sequentially. All original paperwork for each case is kept on file.

Definitions

Entry Criteria. All HCFA 1500 forms, all UB 282 forms, and all prospective pricing consult sheets submitted by claims analysts and case managers were included in the study.

Exclusion Criteria. Any cases for which insufficient information was available to properly assess the case clinically or from a pricing perspective were excluded. The exclusion rate was less than 2 percent.

Provider Charge. The price the provider actually charged the insurance company on the submitted invoice (HCFA 1500 or UB 282) or the price the provider listed as its charge for therapy on the prospective pricing sheets.

Reasonable and Customary Price. Over a four-year period, the authors have collected dozens of home care provider contracts covering fee-for-service and per diem rates. The reasonable and customary price is defined as the lower of the average price charged by multiple national and local vendors for the same therapy and a price that would allow a 20 percent pretax profit margin. Reasonable and customary is not a "ballpark" or "lowest bid" price. It allows a fair profit margin for a company operating within the quality guidelines established by JCAHO.

Short-Term Cost Reductions. The difference between the provider charge and the reasonable and customary price for a specific term of therapy (e.g., a 7-day antibiotic course, the first course of a 6-week cycled chemotherapy, or the first month of continuous total parenteral nutrition administration).

Extended Cost Reductions. Short-term cost reductions multiplied by the number of periods in which the therapy was prescribed or given (e.g., the first course of a 6-cycle therapy times 6 or the average duration of therapy for an illness). Validation was provided by the insurance company. On several occasions actuary and quality assurance personnel from the insurance company reviewed the data provided in the consults and compared the savings computations with the written savings reports the insurance company's case managers were required to keep. Anecdotally, on very few occasions was the case manager not able to get the provider to agree to provide the therapy for the reasonable and customary price. A prospective analysis by the insurance company of 400 consecutive consultations revealed 10 cases where the consult reasonable and customary price was not achieved. In eight of those cases, the price was still significantly lowered.

Indirect savings were not assessable. Indirect savings occurred when case managers used information from one consult to assist them in negotiations with providers on other cases that were similar in therapy and when providers knew the insurance company was evaluating their prices prospectively. The latter factor is known to have had a major impact. For example, one year into the study, one national home infusion provider installed a separate toll-free telephone line just for this insurance company to obtain special pricing information.

Discussion

The results of the program are summarized in table 1, page 39. Cost reductions are occurring as a result of this program. Short-term cost reductions, with the caveat mentioned in the methods section, are hard, bottom-line savings. The extended cost reductions have one additional caveat: therapy change due to a change in patients' clinical conditions. For example, if the original prescription called for 6 weeks of therapy and it was cut short or extended, the total cost reduction would need to be adjusted. It is believed that this effect would result in little change up or down in the totals.

Table 1. Program Savings since Implementation

                     Short-Term     Extended       Average
           Claims      Cost            Cost          Cost
Year      Consults   Reduction      Reduction     Reduction

1989        100      $  579,407     $ 1,540,807     $15,407
1990        121      $  442,394     $ 1,683,858     $13,916
1991        551      $1,122,155     $ 4,791,790     $ 8,697
1992        477      $  742,591     $ 2,764,571     $ 5,796
1993(*)     203      $  378,701     $ 1,365,763     $ 6,727

Total     1,453      $ 3,265,248   $ 15,146,789    $10,424

(*) Not for fully year.

We believe the drop in the average savings per case from inception to 1992 is due to several factors. During the pilot phase, most of the cases were retrospective evaluations of HCFA 1500 and UB 282 claims, selected primarily on the basis of the amount of the claim. Thus, early in the study, only the larger claims were sent for consultation. As case manager familiarity with the program grew, more cases were sent. Moreover, as the program grew after its company-wide launch in 1991, cases were selected on the basis of discharge diagnosis as well as claim amount, prospective consults were instituted, and certain providers were targeted for evaluation of all claims. The increase in 1993 would support this in theory, as, in late 1992 and early 1993, we began expansion of this service to other clients.

In an effort to measure whether changes occurring in the home care industry were having a major impact on the cost reductions achieved through this program, consultations in the first quarter of 1993 were compared with those in the third quarter of 1992 (table 2, above).

Table 2. Impact of Changes in Home Care Industry

                        3rd Quarter 1992   1st Quarter 1993

Number of Consults           110                 95
Total provider charge      $364,719           $294,448
Total reasonable and
customary pricing          $228,148           $178,151
Cost reduction               37%                39%
Upcharge                     60%                65%

The program has already proved its ability to achieve highly significant savings over time. We believe claims analysts and case managers embrace the program for several reasons:

* There is a multidisciplinary team of clinicians in outpatient care who are at their disposal via an "800" telephone number.

* It takes them out of the role of price shopper, saving them the three, four, or five calls to get the best price and valuable time that they can now use to concentrate on the clinical aspects of managing cases.

* By providing a full SOAP (subjective, objective, assessment, plan) written consultation, the program serves an educational function, as findings/data can be transferred to other cases and other case managers, including new employees.

Furthermore, two clients have begun conducting weekly "teaching rounds" in which, via conference call, the most interesting cases are discussed among case managers and the multidisciplinary team. This effort serves to improve the quality of care for claimants and helps participants to better understand provider "gamesmanship" when it is detected during the consultative process.

Finally, key indicators have been identified that have served to improve the claims analysts' and case managers' index of suspicion regarding which types of cases to send for evaluation. As media reports of fraud and abuse, price gouging, doctor deals, referral kickbacks, and inappropriate care increase, the price for home care will decrease. As outpatient care comes under increasing scrutiny by payers and government agencies, it is likely that prices will decrease even more.

Conclusion

Significant cost reductions can be achieved by incorporating protocols and programs to prospectively monitor and retrospectively audit providers of HDIT. These data, if applied to the total HDIT market, indicate that approximately $1.48 billion could be saved by managing the provision of HDIT and the costs associated with it.

However, as we have seen over the past four years, providers who abuse the system are likely to continue their efforts. Thus, although their methods will change, there will continue to be a need for monitoring the companies that are contributing to the health care industry's problems.

Selected Case Examples from the Study

* 9-year-old male, HIV+, Dx pneumonia, on ceftazidime and IgG. Provider charge $4,997 per day, R&C $2,485 per day, cost reduction of $2,512 per day, $40,900 over the course of treatment.

* 40-year-old male, myeloid leukemia, post-bone marrow transplant, on gamimmune N 42.5 grams IV weekly for 16 weeks. Provider charge $103,173, R&C $60,418, cost reduction for 16 weeks $42,418.

* 36-year-old female, with breast cancer, on chemotherapy, Provider charge $1,81 0, R&C $826.48, cost reduction $983,52, for chemo course 5,280.

* 29-year-old male, HIV+, cytomegalovirus and anemia, on Gancyclovir and Erythropoletin. Provider charge $4,359.60, R&C $2,138.50, cost reduction $2,221, 10, for course of therapy $78,156.

* 35-year-old male, malnutrition secondary to HIV, on total parenteral nutrition. Provider charge $13,276.77 for 1 0 days, R&C $4,000, cost reduction $9,276,77. (Claimant had already been on therapy for 5 months, and therapy went on for several more months. Including a refund for therapy already received, the total cost reduction was $123,206.

* A patient was given prescriptions for an extended supply of several medications consistent with the treatment of AIDS and AIDS-related problems (e.g., Neupogen 240 vials, Cipro 360 caps) He was told to have them filled and to bring the full supply to the doctor's office. Provider charge $82,976, R&C $38,796, cost reduction $44,180, However, the real question was appropriateness of dispensing these quantities, and the case manager dealt with this issue first.

* 19-year-old female with unknown diagnosis was being started on total parenteral nutrition at home. The consult originally was for pricing. However, the clinician involved felt there had to be more to the story for two reasons. It's unusual and can be dangerous to start total parenteral nutrition at home, and the diagnosis was not recorded. The clinician placed a call to the case manager to request more information. As it turned out, the patient was 7 months pregnant and suffering from hyperemesis. The physician had never used total parenteral nutrition but was told by the local provider that it was okay to do it this way. The case manager suggested hospitalization to assess the patient and to begin total parenteral nutrition in a controlled environment. The patient's potassium was 2.1 on admission. The savings in terms of the health of the mother and the baby are unknown.

(*) Data from Robinson Humphrey Co., Inc., Shearson Lehman Brothers, Inc., July 19, 1991.